10 valuable insights into the ancient Stoic thought for successful investing

By Mateus Abrita

Moving average, Day Trade, bull spread, derivatives, Earnings before interest, taxes, depreciation and amortization (Ebitda), dividends, technical analysis, fundamental analysis... There are many terms and areas of study within the investment market. However, one thing has always caught my attention since 2005, when I made my first investment in variable income. I observed that people were mesmerized with the market and with the possibilities of "easy" earnings and neglected a fundamental aspect in investments, the emotional and psychological side.
In this sense, I was enchanted by the Stoic philosophy, which is pointed out by many as a practical philosophy, that is, it proposes instruments that will not only generate abstract reflection but that have the potential to effectively contribute to your daily lives through thinking techniques that can be adopted. Therefore, the purpose of this book is to raise just a few elements of this very important topic, full of nuances and particularities. If I manage to pique my dear reader's curiosity to study more the emotional aspects in decision making, as well as delve into Stoic philosophy, this work will have fulfilled its role.

• Language: English
• Publisher: Editora Dialética
• Release date: Apr 11, 2022
• ISBN: 9786525230740

Book preview

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Don't fall into the mind traps when investing.

Foreword

by the brilliant

psychoanalyst

Christian Dunker

Afterword by the great

economist and fund

manager Paulo Gala

I dedicate this work to those who seek to understand the mind functioning concerning investments.

ACKNOWLEDGMENTS

Firstly I am grateful to God and my family for their continued support. I appreciate the scholars and researchers who have dedicated their lives to the development of knowledge. I am grateful for those who fight and have fought for Democracy, which allows the free debate of ideas and the progress of science and humanity.

I appreciate, especially, my cherished Christian Ingo Lenz Dunker for the brilliant lecture on the libidinal economy of the investor and the great economist Paulo Gala, for the enlightening afterword, therefore, I record my deep admiration.

We can be blind to the obvious and

also blind to our blindness.

Daniel Kahneman

ABOUT THE AUTHOR

Professor Mateus Boldrine Abrita, Ph.D. graduated (UFMS), has a master’s degree (UEM), and a doctorate (UFRGS) in Economics. He is currently a professor at the Mato Grosso do Sul State University. He began his studies into the financial system and capital markets in 2005. He taught courses in the capital market, macroeconomics, and the Brazilian economy. He also taught courses in the financial market and economic conjuncture. He has published books, book chapters, and articles in scientific journals in Brazil and abroad. In addition, he presented works at scientific events in Brazil, South American countries, Europe, and the United States.

Proofreading: Carolina dos Santos Carboni.

PROLOGUE

Moving average, Day Trade, bull spread, derivatives, Earnings before interest, taxes, depreciation and amortization (Ebitda), dividends, technical analysis, fundamental analysis... There are many terms and areas of study within the investment market. However, one thing has always caught my attention since 2005, when I made my first investment in variable income. I observed that people were mesmerized with the market and with the possibilities of easy earnings and neglected a fundamental aspect in investments, the emotional and psychological side.

When I started to get a degree in Economic Sciences, I was even more intrigued to learn that a whole theoretical current, very important in economics, assumed that human beings were perfectly rational and always made the best economic decision. This came as a surprise to me, as it was not what I observed in practice. Fortunately, I got in touch with several other strands that questioned this positioning and became very interested in the subject.

In all these years, since 2005, I made a lot of mistakes, studied a lot, and learned a little, but one thing I still see in beginner investors and even some experienced ones: contempt for their self-knowledge and emotional intelligence.

To illustrate this thought, I tell a story here. I once met a retired gentleman who sold all his possessions (a house and a farm) to invest everything in Day Trade,¹ as he was delighted with technical analysis. A short time later, I heard that he had a huge loss of his assets. This example demonstrates that you can often take courses in fundamental analysis² and technical analysis,³ but if you are not attentive to decision-making and emotional intelligence, your investments are at serious risk.

Probably, he even possessed an initial level of knowledge. However, by investing 100% of his assets of a lifetime, that was built with a lot of work and effort, he became emotionally involved, removing the rational and cold character of the strategy, which is so necessary, above all, in variable income (which like the name says, will vary, up and down, and not just go up, as many think).

Thus, getting emotionally involved in investment decisions is a natural tendency and has been proven by scientific studies.⁴ If you do not pay attention to this issue, you will expose yourself to serious risks, compromising the success of your investments in the long term.

In this sense, I was enchanted by the Stoic philosophy, which is pointed out by many as a practical philosophy, that is, it proposes instruments that will not only generate abstract reflection but that have the potential to effectively contribute to your daily lives through thinking techniques that can be adopted.

Therefore, the purpose of this book is to